When it comes to buying a new car, most people drive around town and stop at various dealerships to find the car they like and then begin the negotiation process. Typically, the first dealership will not be the final stop as the buyer will continue to search, hoping to find the car a little cheaper. Often, a buyer will travel to multiple dealerships before finally finding a price and terms that are acceptable which wastes not only time but gas money and effort. The Internet has made the process slightly easier through sites such as Edmunds.com, allowing buyers to get price quotes. There is, however, still an easier way! Use the reverse auction!

The process of the reverse auction is quite simple and detailed below. The idea is basically to find the exact car that you want to purchase and then through a series of brief phone calls, the dealers will do the work for you to have you driving that new car in no time and at the lowest possible price. Here are the steps to follow:

1. Find The Exact Car You Want To Buy

   Do your research on the Internet and then go to various dealerships and test drive the potential cars you are considering. It is very important at this stage to know precisely what you are buying. Once you’ve decided on a make and model, find out important details like whether the car comes with floor mats standard or if you need to make that a requirement when you negotiate. You need to be able to say, “I want a 2008 Honda Accord EX with 4 doors, an automatic transmission, black leather interior, black exterior, alloy wheels and the 6 speaker audio system.”

2. Go To The Car Manufacturer’s Website And Print Dealer Phone Numbers

   This method works best when you live in an area with multiple dealerships within an afternoon’s drive. I live in Naples, Florida so I have the option to drive to Orlando, Tampa, Sarasota, Miami, Fort Lauderdale and so on. In the next step, you will begin to compile a list of prices so you will be able to quickly decide if it is worth a longer drive to the dealership for the extra savings.

3. Pick Up The Phone And Call

   Begin calling all dealerships and ask for the Internet Sales Manager! The Internet Sales Department at dealerships will always have a lower starting price so don’t waste time negotiating with the salesperson on the floor. Use your line in Step 1 above to tell them exactly the car you want. It is very important to explain your method to the dealer at this stage. I always tell them, “I’m going to call every dealership within 3 hours of me and tomorrow I will drive over to the dealer with the lowest quote and buy on the spot. I need the car immediately.” This will get the salespeople salivating and know that they have a sale in their immediate future if they can just get that lowest price. Sometimes they won’t want to play along or they will think you are just trying to get a low quote from them to use as a negotiating tool at your local dealership. If this is the case, I like to say to them, “My aunt and uncle live in [insert dealership city] so it will be a good excuse to visit them anyway.”

4. Make The Dealership Work For You

   Once the dealer gets back on the phone and gives you the lowest price, thank them for their effort and make sure you tell them that you need to get off the phone to continue calling. This will make them wonder how strong their quote really is. At this point, invite them to call you back later to see how their quote is matching up against the competition and remind them that tomorrow morning, you’ll be getting up bright and early to drive over to your chosen dealership. Hang up the phone and call the next dealership, repeating this step. If the next dealer’s quote comes in higher, let them know that the previous dealership gave you a lower quote and ask them to beat it.

5. Wait For The Phone To Ring

   A few hours after you started the process of calling, your phone will start to ring. Familiar voices from dealerships will be asking you what your lowest price is so far. Do Not Lie! The dealerships will pick up on this in a second and drop out of the running. Instead, tell them honestly what your lowest quote is and they will likely drop their price a couple hundred dollars below that quote. Thank them and wait for the phone to ring again. Once the phone stops ringing for the day and sometime before 5pm or so, I like to make one last round of calls to see if I can’t get the dealerships down another couple hundred dollars. So far, it has worked every time.

6. You Have The Lowest Price So Seal The Deal

   Once you have your lowest price in hand and you’ve chosen the dealership to buy from, call them back and ask for the quote in writing. Have them fax or email you a copy with the Sales Manager’s signature. Remind them to include in their quote every detail you specified. If you are buying a low-end car that doesn’t come with floor mats for example, ask them to put the floor mats in writing so there isn’t an issue when you arrive at the dealership. Then, let them know again that you’re coming the next day and ensure that the car is in stock and ready to go.

Important Things To Consider When Using The Reverse Auction

This method works best when you are not trading in a car. It is impossible for them to work the trade-in into the deal over the phone so try and sell your car yourself–you will likely get more money for it anyway. Also, if the dealership asks how you will be paying for the car, it is best to tell them cash or that you have your own financing. Although dealers have their own financing most of the time, this is an easy place for them to “make up the difference” in what they are discounting from their normal price. Finally, keep in mind that this method will work the best when you are buying a common car. If most dealerships only have one of the vehicle you’re after on their lot, they’re not going to be as inclined to drop the price substantially to sell it. If you’re buying a Bentley or a very specific model car, you may not want to waste your time. However, if you are like most of us and buying a Honda, Toyota, Chevrolet, etc, then this method will work amazingly well!

Why Does The Reverse Auction Work?

The reverse auction works every time because what you are actually doing is finding that one dealer in your area that is looking at a lot full of cars thinking, “How am I going to sell all of these?” Dealerships often order too many cars and do not realize they did so until it is too late. In these situations, the dealers will give you the car at dead cost (or sometimes below) just to get it off of their lot. I promise you will encounter one or two dealerships that will give you a quote far higher than any of the others that you talk to. When you point out how high their quote is, they will often respond saying, “If that quote is so good, buy from them.” That’s fine and you will! That dealership likely doesn’t have the car in stock or they just aren’t in a rush to sell one for very little markup. It doesn’t matter to you as the buyer because you have plenty of other dealers to work with.

My Own Experience With The Reverse Auction

Back in 1997, I needed a simple car that I wouldn’t have to worry about while I went to school for my Masters degree. I decided to get a Honda Civic for that purpose so I followed the steps outlined above. Being a Honda, I had a number of dealers to call so I got to work. Before long, the dealers were calling me faster than I could keep up. Finally, a price came in that was around $700 lower than the lowest quote I had thus far. I was shocked! I immediately asked the dealership to fax the quote over to me and within minutes, I had it on paper and in my hands. When other dealerships called to see how they were doing, I told them about the lowest quote thus far and two of them said the exact same thing–”That’s impossible. That price is $700 lower than dealer cost. Good luck, buddy, but I think that’s a scam. I promise it will be higher when you get there.” Luckily for me, I really did have a friend in that town so I decided to take my chances. The next day, I drove to the dealership and sitting right in front was my new Honda Civic. I went inside and the papers were already filled out–for exactly the price the dealer quoted me! Once I had completely signed for the car (after test-driving and inspecting the vehicle), I told the dealer that two of his competitors said the car was roughly $700 below cost. The dealer smiled and explained his situation–the lease was up on the dealership’s building and they were having a new building constructed. Unfortunately, that was well behind schedule and so all of the vehicles on the lot were going to have to go to a temporary lot for storage. That was going to cost them quite a bit of money so despite losing $700 on the car, they still felt that it was the better thing to do instead of paying the high storage premium. That’s the reverse auction at work!

Since that time, I have personally used this method to buy myself an Audi A4. I have explained it to every person I know and since I actually enjoy doing this, I volunteer to help my friends get this to work for them. As a result, I have helped friends buy a Jeep Cherokee, a Honda Accord, a Cadillac STS, another Audi A4 and a Toyota Camry. What I enjoyed most about helping my friends is that in all but one of these instances, my friends already have what they thought was an acceptable price from the dealership but by using this method, they saved a substantial amount of money.

When I tell people about this method, they are often skeptical and ask how much time I spend to get the best price. The most time I’ve ever spent was the first time I tried it. I wasted a lot of time chit-chatting with the dealerships so it was the better part of one afternoon. Since that experience, I have become quite efficient at this. When helping some friends of my family buy their Cadillac STS, I would estimate I spent no more than two hours on the phone. They had their best quote from a local dealership and I was able to beat it by $2,300! That ended up being a very valuable couple of hours!

Go Forth And Buy Your New Car

I’d love to hear success stories from my readers in the comments below. If you have any trouble with your dealerships, feel free to post those experiences here as well. This is just my easy way to save on buying a new car so feel free to tweak it to suit your own needs. Happy buying!